Recent New Jersey Insurance Decisions

In order to succeed in a premises liability action, a person who slips and falls in a retail establishment generally must establish that the business owner knew or should have known of the unsafe condition that led to the patron’s fall and failed to correct it. In other words, the injured patron must show that the business owner was somehow at fault (i.e., negligent). In the first instances, that “fault” consists of actual or constructive notice of a hazardous condition. It is not enough for the injured patron to simply show that she fell or even that she fell because of the existence of a dangerous condition; the business owner must have notice of the hazardous condition.

There are, however, exceptions to the notice requirement. One such exception is the mode-of-operation rule. That rule permits the trier of fact to draw an inference that the business owner had constructive notice of a hazardous condition if it can be shown that there was a substantial risk of injury inherent in a business owner’s method of doing business. While the injured party must still show that a hazardous condition existed, he or she is not required to prove that the business owner had notice of that condition. When the rule is invoked the burden shifts to the business owner to show that it was not at fault. To do that, the business owner must show that it exercised due care. What constitutes due care depends on the nature of the risk posed by the particular business method or practice at issue. Thus, the mode-of-operation rule substantially alters the ordinary burden of proof.

The mode-of-operation rule applies to retail establishments whose operations involve a self-service component. Under the rule, there is a presumption that customers will act carelessly in situations where the business’s mode of operation is designed to allow patrons to directly handle products or merchandise. Thus, if, for example, a grocery store allows customers to select produce from bins or displays, a patron who slips and falls on produce that has fallen to the floor can benefit from the mode-of-operation rule. Similarly, if a restaurant has a self-service salad bar the mode-of-operation rule may be triggered. The rule applies regardless of whether the customer slipped on something he or she dropped on the ground or whether it was dropped by the business owner’s employee or another customer.

The mode-of-operation rule was first adopted by the New Jersey Supreme Court in 1964 in Bozza v. Vornado, Inc., 42 N.J. 355 (1964). In that case, the plaintiff claimed she slipped on “a sticky substance which was very slimy” in the cafeteria of the defendant’s store, which was self-service. Id. at 358. The plaintiff claimed that patrons carried their food with or without trays and that there were “drippings, paper straw holders, napkins and dirt on the floor.” Id.

Two years later, the Court revisited the rule in Wollerman v. Grand Union Stores, Inc., 47 N.J. 426 (1966). In that case, a woman claimed she slipped and fell on a string bean in the produce aisle of the defendant’s supermarket. In explaining why the mode-of-operation rule applied in that case, the Court noted:

When greens are sold from open bins on a self-service basis, there is the likelihood that some will fall or be dropped to the floor. If the operator chooses to sell in this way, he must do what is reasonably necessary to protect the customer from the risk of injury that mode of operation is likely to generate; and this whether the risk arises from the act of his employee or of someone else he invites to the premises. The operator’s vigilance must be commensurate with that risk.

Id. at 429.

Over thirty-five years later, the New Jersey Supreme Court expanded application of the rule in Nisivoccia v. Glass Gardens, Inc., 175 N.J. 559 (2003). In that case, the plaintiff slipped on a grape in the defendant’s supermarket. The “grapes were displayed in open-top, vented plastic bags that permitted spillage.” Id. at 561. The grapes, which were located in the produce aisle, were pre-packaged; the customers did not have to place the grapes in the bags. The grape that caused the plaintiff to slip, however, was not located in the produce aisle. Rather, the grape was located on the floor near one of the cash registers. Based on those facts both the trial court and the Appellate Division concluded that the mode-of-operation rule did not apply. The New Jersey Supreme Court reversed, reasoning as follows:

Customers typically unload their carts onto the checkout counter. Droppage and spillage during that process are foreseeable. Indeed, because of the way the grapes were packaged, they could easily have fallen out when accidentally tipped or upended in a shopping cart anywhere in the store. The open and air-vented bags invited spillage. It was foreseeable then that loose grapes would fall to the ground near the checkout area, creating a dangerous condition for an unsuspecting customer walking in that area.

Id. at 565. The court noted:

Business owners owe to invitees a duty of reasonable or due care to provide a safe environment for doing that which is within the scope of the invitation. The duty of due care requires a business owner to discover and eliminate dangerous conditions, to maintain the premises in safe condition, and to avoid creating conditions that would render the premises unsafe. Ordinarily an injured plaintiff asserting a breach of that duty must prove, as an element of the cause of action, that the defendant had actual or constructive knowledge of the dangerous condition that caused the accident. Equitable considerations have, however, motivated this Court to relieve the plaintiff of proof of that element in circumstances in which, as a matter of probability, a dangerous condition is likely to occur as the result of the nature of the business, the property’s condition, or a demonstrable pattern of conduct or incidents. In those circumstances, we have accorded the plaintiff an inference of negligence, imposing on the defendant the obligation to come forward with rebutting proof that it had taken prudent and reasonable steps to avoid the potential hazard.

Id. at 563.

The only “self-service” aspect in that case, however, involved a customer picking up a pre-packaged bag of grapes and placing it in his or her cart and then removing the bag from his or her shopping cart and placing it on the checkout counter. This was not a situation where the customer actually selected the grapes and placed them in the plastic bag. Thus, the court’s holding went beyond the traditional application of the mode-of-operation rule. Indeed, the Court suggested that the mode-of-operation rule would apply any time “a dangerous condition is likely to occur as the result of the nature of the business, the property’s condition, or a demonstrable pattern of conduct or incidents,” not just when the injury has a nexus to a self-service operation. Id.

The New Jersey Supreme Court recently clarified the scope of the mode-of-operation rule in Prioleau v. Kentucky Fried Chicken, Inc., 2015 WL 5682259 (N.J. Sept. 28, 2015). There, a patron of a Kentucky Fried Chicken restaurant slipped and fell while walking to the restroom. “She alleged that she fell either because defendants failed to exercise reasonable care to keep the restaurant floor dry on a rainy evening or because defendants’ employees tracked oil and grease from the restaurant’s kitchen to the area near the restroom.” Id. at *1. The plaintiff claimed that the floor “felt greasy and wet” and was as slippery as ice. Id. at *2. Significantly, the plaintiff did not allege that her injuries were related to any self-service aspect of the defendant’s operations. Nonetheless, the trial judge instructed the jury on application of the mode-of-operation rule.

The jury rendered a verdict in the plaintiff’s favor and the defendants appealed. The Appellate Division reversed, finding that the mode-of-operation charge was improper. However, one judge dissented, in part, finding no error with that charge. Because one judge dissented, the plaintiff was able to further appeal to the New Jersey Supreme Court.

The New Jersey Supreme Court affirmed, as modified, the majority opinion of the Appellate Division, disagreeing with the dissenting judge. According to the court:

The trial record establishes that plaintiff’s injuries were unrelated to any aspect of defendants’ business in which the customer foreseeably serves himself or herself, or otherwise directly engages with products or services, unsupervised by an employee. Neither theory of liability advanced by plaintiff involved the limited circumstances in which the mode-of-operation rule has been held to apply.

Id. at *1. As further observed by the court:

Significantly, for purposes of this appeal, nothing in the record suggests that when she fell, plaintiff was engaged in, or in contact with, any self-service activity, such as filling a beverage cup at a restaurant soda machine, selecting items from a condiment tray, or that patrons were carrying their drinks or food to the restroom area. Indeed, plaintiff’s testimony established that she had not yet ordered or purchased her dinner when her accident occurred. Instead, by her own account, plaintiff fell immediately after entering the restaurant.

Id. at *3. The Court concluded that “[b]ecause the mode-of-operation rule significantly reduced plaintiff’s burden of proof, and may have determined the outcome, the trial court’s charge on the rule constituted reversible error.” Id. The Court then remanded the matter back to the trial court for a new trial.

Thus, the mode-of-operation rule does not automatically apply every time the defendant’s method of operation gives rise to an arguably hazardous condition, even if the defendant’s business involves a self-service aspect. Rather, there must be some “nexus between the self-service aspect of defendant’s business and the plaintiff’s injury.” Id. at *9. The court summarized the principles governing application of the rule as follows:

First, the mode-of-operation doctrine has never been expanded beyond the self-service setting, in which customers independently handle merchandise without the assistance of employees or may come into direct contact with product displays, shelving, packaging, and other aspects of the facility that may present a risk. . . .

Second, the rule applies only to accidents occurring in areas affected by the business’s self-service operations, which may extend beyond the produce aisle of supermarkets and other facilities traditionally associated with self-service activities. . . .

Third, the mode-of-operation rule is not limited to cases in which customer negligence created the dangerous condition; it also applies to self-service settings in which the injury may have resulted from the manner in which employees handled the business’s products or equipment, or the inherent qualities of the merchandise itself. . . .

Fourth, if the mode-of-operation rule applies, it affects the parties’ burdens of proof in two respects. The rule relieves the plaintiff of the burden of proving actual or constructive notice of the dangerous condition. It also gives rise “to an inference of negligence, shifting the burden of production to the defendant, who may avoid liability if it shows that it did ‘all that a reasonably prudent man would do in the light of the risk of injury [the] operation entailed.’”

Id. at *9 -10 (citations omitted).

The mode-of-operation “rule gives rise to a rebuttable inference that the defendant is negligent, and obviates the need for the plaintiff to prove actual or constructive notice.” Id. at *6. Because the mode-of-operation rule “substantially alters the ordinary allocation of the burdens between the parties,” it should only be used when certain prerequisites are met. The court’s decision in Prioleau clarifies exactly what those prerequisites are. One of the most important prerequisites identified by the Court, which was missing in Prioleau, is that there must be a nexus between a self-service aspect of the defendant’s business and the plaintiff’s injury.